Behind the Scenes of Tokyo’s Political Soap Opera

By William Pesek -
Nov 11, 2013

Shinzo Abe faces plenty of
roadblocks in his quest to revive Japan’s sluggish economy. His
mentor wasn’t supposed to be one of them.

Former Prime Minister Junichiro Koizumi is easily the most
popular Japanese politician of the last 20 years. Not since
Yasuhiro Nakasone in the mid-1980s had a Japanese leader made
such a splash domestically and globally. Not coincidentally,
both were keen reformers -- as Abe, too, claims to be.

After he left office in 2006, the now-71-year-old Koizumi
seemed happy to stay in the shadows. That changed last month,
when he made a very public about-face from his previous support
of Japan’s nuclear industry. “Nothing is as costly as nuclear
power generation,” Koizumi said in an Oct. 1 speech, arguing
that Japan “could do well without” the dangerous reactors on
its seismically active shores.

Since then, Koizumi has made a series of televised comments
about the crisis at Fukushima, the dangers of atomic waste, the
desirability of Japan (TPX) hawking nuclear hardware overseas, and the
urgent need for green alternatives. His campaign is landing a
major blow to Abe’s revival plan. “Abenomics” claims to be
firing three arrows -- monetary and fiscal stimulus, plus
deregulation -- but there’s a nonadmitted fourth: cheaper
energy. The anti-nuclear movement Abe sought to contain now has
a bona fide political rock star on its side.

Koizumi’s Arrow

Why would Koizumi fire his arrow at the heart of his
protege’s program? Some wonder if it’s revenge. After five years
of clearing away the bad loans of the 1990s, privatizing giants
such as Japan Post and scrapping wasteful public works spending
to reduce government debt, Koizumi entrusted Abe with his anti-deflation blueprint. Abe tossed it in his office drawer and
focused elsewhere during his first -- and failed -- stint as
prime minister from 2006 to 2007. Japan’s recovery faltered.

I’m giving Koizumi the benefit of the doubt. He is the
master of the zeitgeist. Like former U.S. President Bill Clinton, Koizumi’s gift was reading the national mood and
harnessing public anger to force his change-resistant Liberal
Democratic Party to act. Koizumi senses the public’s very valid
fear of reactors, and he’s shaming Tokyo to act.

There are actually five things Abe would be wise to learn
from Koizumi to ensure this term ends better than his first.

One, keep your word. Few thought Koizumi could privatize
the sprawling postal system, which ran the world’s biggest
savings bank -- a multitrillion-dollar piggy bank that corrupt
politicians used to fund pet projects. Abe has taken the easy
steps among those he promised: opening the monetary and fiscal
spigots. But more than 10 months in, Abe has had zero success
making Japan more competitive, those steps having failed to spur
innovation and encourage companies to hire more employees or
raise salaries. As 2014 approaches and markets wonder what
gives, Abe hasn’t even fleshed out his much-advertised
restructuring plan.

Two, the people are your secret weapon. Koizumi’s lively
mane of gray hair and blunt comments earned him the nickname
“Lionheart.” He captivated a nation hungry for the strong,
forward-looking leadership Asia’s second-biggest economy hadn’t
seen in years. That gave Koizumi the high approval ratings he
needed to nudge the Liberal Democratic Party in a new direction.

Abe should use a similar dynamic to jam controversial
reforms through his party. Instead, he’s more inclined to tell
Japanese what the country needs than to listen. If Abe worked
harder to get the people behind him, persuading them to call
their parliament members and demand change, Abenomics might
succeed. Instead, the prime minister is earning the public’s
distrust with a bill that would give the government sweeping
power to keep secrets, including those related to the murky and
incompetent nuclear industry.

Think Bigger

Three, it’s not personal. Investors consider Abe a big
thinker; Koizumi wants him to think much bigger. Abe, 59, should
heed Koizumi’s call for an aggressive plan to rid Japan of the
reactors the public came to fear after March 11, 2011, when a
giant earthquake and tsunami destroyed Fukushima. A green
revolution that involves Japan’s vast geothermal resources would
create jobs and prosperity and also serve humankind. Japanese
would rally around an endeavor that would pay bigger dividends
than restarting reactors or selling new ones to India and
Turkey.

Four, mind the neighbors. Koizumi was hardly without his
flaws. Many economists believe his pro-market policies gutted
Japan’s social-safety net and accelerated inequality. But his
biggest failing was angering China and South Korea with
unrepentant visits to Tokyo’s Yasukuni Shrine, which honors
several convicted war criminals along with Japan’s war dead. Abe
refuses to say whether he will visit the shrine, an action that
would further alienate two important economies already seething
over competing island claims. A weaker yen isn’t going to help
Japanese exporters if Chinese and Koreans aren’t buying their
goods.

Five, don’t mess up the endgame. Koizumi throttled back
during the last two years of his premiership, and his reform
drive lost momentum. Abe needs to shift his own into a higher
gear, accelerate upgrades over time and cement them. Otherwise,
his cabinet’s 60 percent approval rating will disappear, along
with his chances of changing Japan Inc.

Abe may be too bitter to realize that his mentor is doing
him a big favor. By lending his popularity to the anti-nuclear
chorus and exciting the public about a pro-growth energy future,
Koizumi isn’t just counseling a better way. He’s offering his
protege an invitation into the pantheon of true Japanese
reformers.